Tax Consequences of Paying Immigration/Legal Fees
Nonresident aliens often incur expenses, such as legal fees, related to changing
their immigration status. Occasionally, there are circumstances where a Department
Head decides to reimburse the individual for the expenses. As a result of
being consulted about the taxability of these reimbursements, the Tax Department
has developed this chart to assist in determining whether the reimbursement is
subject to income tax for the individual.
|Situation||Current or prospective Employee or Independent Contractor
||Current or Prospective Student
|Legal expenses and visa fees paid in connection with visa applications and
renewals as well as travel and other expenses related to obtaining same (J,H,O,TN
||Nontaxable as long as business expenses relate to the primary business purpose
of the University rather than to a primary personal benefit.
||Taxable - not excluded under section 117
|Legal expenses, INS fees and related expenses in connection with obtaining
status as a permanent resident, temporary resident status, or obtaining a
waiver of the two-year home rule requirement under a J visa.
||Taxable. Limited exceptions to this rule may apply when such expenses
relate to the primary business purpose of the University rather than to a
primary personal benefit. Examples of these instances are as follows:
1. An employee's work visa is going to expire and the visa cannot be renewed, and the only alternative is to keep the employee in the US and working for the University to obtain a green card for the individual.
2. The prospective employee is going to be working on a government contract that requires that foreign nationals have a green card.
3. The foreign national will be working on a University project involving technology to which the United States export control laws require that only permanent residents can have access.
4. This position involves extensive travel to other countries and the foreign national's home country (e.g. China, Iran, Iraq) makes it difficult for the person to enter other countries; therefore the foreign national needs a green card so he or she can obtain US travel documents.
|Taxable. No Exceptions.
|A person asks the University to obtain a green card simply because they want
|A foreign national negotiates with the University that as a result of agreeing
to work for the University - the University agrees to obtain a green card
for the NRA.
||Taxable - quid-pro-quo for services rendered.
||Not Applicable (if a person is in this category then that person is an employee
and not a student)